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ARTICLE · 19 NOVEMBER 2020

The Return Of Crown Preference

Hill Dickinson
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As part of the legislative changes brought about by the Finance Act 2020, the Treasury drafted the Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 (the Regulations)...

United KingdomFinance and Banking
Peter Speight
Peter Speight

As part of the legislative changes brought about by the Finance Act 2020, the Treasury drafted the Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 (the Regulations) and laid these before parliament on 14 September 2020. View a copy of the regulations.

The primary purpose of the Regulations is to make provision for certain debts owed to Her Majesty's Revenue and Customs (HMRC) to be included in a category of preferential debt and ensure that more of the taxes paid by employees and customers will be recovered to fund public services, rather than be distributed to other creditors.

This change means that in any distribution of assets in the insolvency of a UK corporate entity, HMRC will now rank in priority to a floating charge holder, unsecured creditors and pension funds in respect of the payment of certain taxes collected or deducted by corporates including:

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